Book Reviews
Book Review of ‘The Aspirational Investor’
Glowingly recommended by two Nobel Laureates, it falls short
 
I have read many books on investing but have not come across one with such glowing recommendations. Praise for The Aspirational Investor by Ashvin B Chhabra comes from five extraordinary people. One is Dr Harry Markowitz known for his pioneering work on modern portfolio theory who won the Nobel Prize in 1990. Jim Simons, one of the top traders in the world, is a mathematician who applied himself to studying pattern recognition and now runs Renaissance Technologies which manages $25 billion. He says that this book is an “original programme to guide an individual.” Glowing endorsements also come from Eric Maskin, Nobel winner in 2007, as well as Burton Malkiel and Charles 
D Ellis, two seminal writers on investing. What is so great about this book? 
 
Chhabra brings some fresh thinking to financial planning. He advocates that investors should create a three-tier portfolio. The first, called essential portfolio, will help you protect your current lifestyle and  should be invested in safe products. The second, labelled important, should be to help meet long-term goals such as retirement. This should be invested in market-linked products. The third portfolio is aspirational portfolio where you should put high-risk products. This is fine in theory. How does one implement it? Chhabra outlines seven steps for this purpose.
 
Step1: Outline Your Goals: Categorise your goals as essential, important and aspirational. A young couple, at an early stage in their financial life, might have goals that include savings for college, owning a home and starting a business; while a wealthy retired couple may have only two goals: maintaining their lifestyle and leaving a legacy.
 
Step2: Goals into Cash Flows: Put numbers to your goals. Quantify the total amount needed today for virtually any goal using one easy formula: amount needed divided by the number of years. If you do this every year, you eliminate the complications of inflation-adjusted cost.
 
Step3: Create Your Wealth Allocation Snapshot: Next, put together everything you own and everything you owe. “This is the step where you will organise your assets and liabilities across the personal risk, market risk, and aspirational risk buckets” and place them in appropriate buckets. 
 
Step4: Assess Your Risk Allocation: Chhabra now wants you to do the right risk allocation across your safety, market, and aspirational portfolios. Can you? As Albert Einstein had said, “everything should be made as simple as possible but not simpler.” Sure enough, Chhabra’s approach breaks down at this stage. He writes, “Alas, there are no exact answers, but there are good guidelines. Your optimal allocation depends on a variety of objective considerations and should strike a balance between factors such as your age and earning potential, your total current wealth, and the ratio of your assets to the amount you need to sustain your lifestyle. Subjective factors such as your goals and your ability to bear losses are also key factors.” 
 
Chhabra goes on to say, “A thorough analysis of your optimal risk allocation must take into account both your financial ability and your psychological ability to bear losses. If you have no ability or desire to take on risk—or, conversely, you have a high tolerance and ability to take on risk—then either a conservative or an aggressive risk allocation may be warranted, defined by the degree to which you allocate assets on a relative basis to your safety portfolio or your aspirational portfolio.” Can anyone do this by oneself? No.
 
Step5: Implement Asset Allocation and Portfolio Diversification: Just as the goals of each risk bucket are different, so, too, are the securities that you will hold within them, as well as the way each portfolio is constructed. Once again, hard for individuals to do it.
 
Step6: Analyse & Stress Test: Chhabra asks his readers to put their portfolio through the following tests: market meltdown test, loss of employment test, sustainability test, aspirational goals test, etc. This, too, is impossible for an individual to handle.
 
Step7: Review and Rebalance: If you are able to take the six steps, you would then have to take the last step which is an annual exercise to keep your finances on track. 
 
Given how much the book is hyped up on the jacket and the recommendations the author has obtained, all this is a bit of a let-down. Perhaps financial planners may have some use of this book. 

User

COMMENTS

Nilesh KAMERKAR

1 year ago

Another excellent review Mr. Basu.

It appears more will go into reading of this book than you can get out of it

Nifty, Sensex, Bank Nifty may rally, if Greece issue is resolved – Thursday closing report
A close of Nifty above 8,400 would be bullish
 
We had mentioned in Wednesday’s closing report that NSE’s CNX Nifty will be under pressure until it regains 8,440. However, the Indian stock market reversed direction and closed with marginal losses, proving that the medium term trend is an uptrend.
 
 
The top gainers and losers on shares of major indices are given in the table below:
 
 
Negative global cues emanating from China and Greece countered the positive sentiments surrounding the upcoming first quarter (Q1) results and led the 30-stock Sensex to close 114 points down on Thursday.
 
The S&P BSE Sensex closed Thursday 114.06 points or 0.41% down after the day's trade. The Sensex touched a high of 27,798.13 points and a low of 27,540.60 points in the intra-day trade.
 
The wider 50-scrip Nifty also closed in red. It was down 34.50 points or 0.41% at 8,328.55 points.
 
Analysts said that after the opening session, markets remained range-bound. However, they soon slipped into negative territory, due to the heavy sell-off in information technology (IT) counters ahead of TCS (Tata Consultancy Services) results. 
 
Market observers also pointed out that the investor confidence was shaken a day after the barometer index lost 484 points due to fears of a Chinese stock markets meltdown and the stalemate in the Greek debt crisis.
 
However, the positive bias is being cancelled-out by the negative international cues from China and Greece. 
 
Even the sharp fall in the light sweet crude oil of West Texas Intermediate (WTI) futures and options index on Wednesday, which pegged a barrel at $50, failed to cheer the markets. 
 
The India markets which depend on Brent crude oil index are also affected by the price movements of the WTI.
 
On Friday, the major trigger for the markets will be the Index of Industrial Production (IIP) data.
 
During Thursday's intra-day trade, healthy buying was observed in capital goods, healthcare and bank stocks. 
 
However, the IT, oil and gas, automobile, technology, entertainment and media (TECK) and fast moving consumer goods (FMCG) scrip came under intense selling pressure.
 
The S&P BSE capital goods index augmented by 344.53 points, healthcare index extended-gains by 23.82 points and bank index rose by 21.32 points.
 
The S&P BSE IT index plunged by 198.47 points, oil and gas index receded by 199.54 points, automobile index plummet by 105.96 points, TECK index was lower by 91.32 points and FMCG index was down by 44.87 points.
 
The major Sensex gainers during Thursday’s trade were: BHEL, up 3.59% at Rs264.35; Larsen and Toubro (LT), up 2.39% at Rs1,847.50; Hindalco Inds, up 2.21% at Rs.104; Hero MotoCorp, up 2.05% at Rs2,605.40; and Bharti Airtel, up 0.83% at Rs432.90.
 
The major Sensex losers were: Vedanta, down 4.86% at Rs139; TCS, down 2.80% at Rs2,521.40; Bajaj Auto, down 2.33% at Rs2,513.95; Infosys, down 2.04% at Rs937.70; and Tata Motors, down 1.73% at Rs398.15.
 
Among the Asian markets, Japan's Nikkei was up by 0.60%, China's Shanghai Composite Index gained by 5.79%, and Hong Kong's Hang Seng rose by 3.73%.
 
In Europe, the London FTSE 100 index was up by 1.08%, the French CAC 40 was higher by 2.11% and Germany's DAX Index gained by 1.92% at the closing bell in India.
 
The closing values of select world indices are given in the table below:
 
 
Among European indices, DAX was at 10,948.86, up 1.91% and FTSE 100 was at 6,562.69, up 1.11%. Athex Composite Share Price Index was at 797.52, up 2.03%. US index futures were marginally in the red.

User

Maharashtra Chief Secretary asked to discipline PIOs
The onus of organising the documents meticulously before calling applicants for file inspection would be on the PIOs
 
Often, Public Information Officers (PIOs) have been asking citizens to visit the office for inspection of files, at very short notice. Even for information that may amount to a couple of pages that could have easily been given by the PIO, as the reply to the information query. All that the PIO had to do, was to apply his mind.
 
Maharashtra state Chief Information Commissioner (SCIC) Ratnakar Gaikwad, appreciating a circular issued by Ajoy Mehta, the Municipal Commissioner of Mumbai, sent out a detailed notice as to when and how PIOs should call applicants for inspection of files, under the Right to Information (RTI) Act.
 
The SCIC’s order on 2 July 2015 is a sequel to an email sent by former Central Information Commissioner and RTI activist, Shailesh Gandhi on 30 June, 2015, with reference to Mehta’s order. Mr Gaikwad treated this email from Mr Gandhi as an official complaint under Section 18 (1) (f) of RTI Act and the Commission under provision of Section 19 (8) (a) has directed the Chief Secretary to “issue similar instructions to all the PIOs under the control of the Government of Maharashtra. Compliance of this order should be reported to Commission by 31 July 2015.’’
 
Mr Gandhi says, “This is one of the rare, pro-active citizen-friendly order and both, Mr Mehta and Mr Gaikwad need appreciation. Now, as directed by SCIC Gaikwad, the Chief Secretary must issue the circular by 31st July, so that it percolates to every public authority in Maharashtra. Also, the rules set for the PIO regarding inspection of files should be put up as large sized posters in offices of the Commission so that PIOs who visit often, read them. The same should be uploaded on websites of public authorities as well.”
 

BMC’s circular that triggered it all

“The circular issued by Ajoy Mehta, Municipal Commissioner, Mumbai, on 19 May 2015 states that “According to the RTI Act 2005, clause 6(1) in many cases, persons, who have applied for getting information, are intimated by the Public Information Officers (PIOs) to come and inspect the documents. The State Information Commissioner has objected to this in some cases. If the person has not applied for the inspection of documents and the information he has requested is not voluminous, he should not be asked to come for inspection of documents. In such cases, number of pages should be counted and the applicant should be informed to pay the prescribed charges.”
 
“In cases, where the information requested by the applicant is voluminous, he may be given a chance to see and inspect the documents and given copies of the requisite records by charging the prescribed fee.”
 
“In cases where the applicant has applied for inspection of the documents or the information he has requested is voluminous, an index of all the documents should be prepared before he is called for inspection of the documents. Also, each page in the file must be numbered. Three dates and timings should be intimated to the applicant before he is called. If these dates are not convenient to the applicant, he should be asked to get in touch with the PIO. The file numbers of the files in which the information requested by the applicant is available, should be intimated.”
 
“In case, on the date, on which the applicant is coming, the concerned PIO has to go out of office because of some important work, he should hand over the responsibility of giving documents for examination to his colleague or assistant. As directed by the Circular dated 9th July 2009, the office telephone number as well as email address of the PIO should be intimated to the applicant.”
 

The CIC order that upholds BMC commissioner’s circular for implementation:

The CIC order of 2 July 2015, states that, Shailesh Gandhi, in his mail of 30 June 2015 has pointed out that, “It is seen that for simple information requests, PIOs send letters to applicant asking them to come and inspect records. When the applicant gets time from the PIO to inspect, a bunch of files is offered and the applicant is told to find the information.”
 
“He (Mr Gandhi) has further mentioned that in this connection, Municipal Commissioner, BMC, has taken a very good initiative by issuing a circular wherein detailed instructions have been given to the effect that the information seeker need not be asked to come for inspection of documents unless the information is voluminous. In those cases, where information requested by the applicant is voluminous, he may be given a chance to see and inspect the documents, but after pages are counted and required charges are communicated to the information seeker.”
 
The SCIC as mentioned in the article treated Mr Gandhi’s email as an official complaint and directed the Chief Secretary to issue a circular based on 19 May 2015 circular of BMC Commissioner, to all public authorities in Maharashtra.
Kudos to Mr Mehta, Mr Gandhi and Mr Gaikwad – now let us wait for Chief Secretary’s action.
 
(Vinita Deshmukh is consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.)

User

COMMENTS

nilesh prabhu

2 years ago

excellent. We need more people like Shailesh Gandhi, Deshmukh.

The society should ensure that these people are motivated enought. else they will go the kejriwal way.

Meenal Mamdani

2 years ago

Excellent. Thanks to Vinita Deshmukh we readers now have become aware of the duties of the PIO.

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)